Published Online: February 12, 2010

N.J. Gov. Lays Out Plan to Close $2.2 Billion Budget Hole

Saying New Jersey is in a fiscal crisis, Gov. Chris Christie on Thursday told lawmakers that he plans to use his broad executive powers to close a $2.2 billion budget gap by withholding education money, and by cutting funding for hospital charity care and public transportation among hundreds of other programs.

In his first major budget speech since taking office last month, the Republican governor told lawmakers that the current budget is in "shambles."

To close the budget hole, Christie plans to freeze $1.6 billion in unspent money, including $475 million in school aid, $62 million for higher education, and $12.6 million in hospital charity care for low-income and indigent residents. He will also freeze nearly $16 million in unused grant money from the Division of Youth and Family Services, $158 million from the Clean Energy Fund, and nix a $32.7 million subsidy to NJ Transit.

New Jersey Governor Chris Christie (R) delivers an address to a special joint session of the New Jersey Legislature on Feb. 11 in Trenton, N.J. Christie announced that he will cut state spending to balance the budget this year.
—Curt Hudson/AP

Christie told a joint session of the Legislature "higher spending is the road to ruin."

"Today, we come to terms with the fact that we cannot spend money on everything we want," he said. "Our conscience and common sense require us to fix the problem in a way that does not raise taxes on the most overtaxed citizens in America."

Christie took several swipes at his predecessor, Democratic Gov. Jon Corzine, saying that his 2010 budget contained the same "worn-out tricks of the trade" and criticized the Corzine administration's revenue projections.

Democrats said that while Christie didn't raise taxes to fill the gap, his actions would affect citizens' wallets nonetheless.

To pay for the reduction in school aid, nearly all of the state's 581 school districts will be forced to dip into their surpluses — money that would otherwise have reduced homeowners' property taxes — and more than 100 districts will lose all state aid for the remainder of the year.

"We're not really balancing our budget if we're passing on our problems to our property taxpayers," said Lou Greenwald, a Democrat who chairs the Assembly Budget Committee.

Christie said that because the frozen school aid only applies to districts with surpluses, no teachers would be laid off, textbooks would still be bought, and no new property taxes would be needed.

Frank Belluscio, spokesman for the New Jersey School Boards Association, said any cut would affect districts eventually, but agreed that school programs probably wouldn't need to be cut immediately under Christie's proposal.

Belluscio said his group was relieved to hear Christie was talking about withholding only $475 million from schools.

"We were hearing a billion dollars," he said.

Corzine had proposed cutting $300 million in school aid before he left office in January but planned to ask for legislative approval to do it; Christie administration officials said it can be done through an executive order, which he signed privately Thursday before speaking to lawmakers.

Democratic leaders said they were looking into whether the governor could unilaterally make the school cuts.

Senate President Steve Sweeney said he was disappointed that Christie has chosen to "govern by executive order" rather than work with the Democratic Legislature.

Other cuts likely to be felt by most residents include getting rid of a state subsidy to NJ Transit, which may mean reduced services and higher fares.

Christie also cut 375 programs that he deemed inefficient, including freezing a job-creation program under Corzine that offered $3,000 grants to companies for every new employee they hire and keep for at least a year. That will save nearly $58 million.

Last month, Christie criticized the previous administration for approving $121 million in extraordinary aid to five distressed municipalities just before Corzine left office. Republicans had argued for the audits as a way to monitor the spending.

On Thursday, Christie said he would be cutting those audits.

Health care for low-income residents also took a big hit. The NJ FamilyCare program, which offers free or subsidized health insurance coverage to low-income children and their parents won't add more adults, and 11,700 immigrants who have a legal status but not citizenship will no longer be eligible.

The program provides health care services to nearly 580,000 uninsured children and 228,000 low-income parents in the state.

Some matching federal dollars will be at risk as a result of the cuts, according to Christie administration officials, but they could not specify how many.

Environmentalists blasted Christie for scrapping the remainder of the Clean Energy Fund, which offers matching grants to people who make energy efficient upgrades, such as installing new windows and appliances.

"It's bad for the environment and bad for the economy," said Jeff Tittel, the executive director of the New Jersey chapter of the Sierra Club, who estimated that the program creates as 20,000 clean energy jobs.

The Public Advocate's Office, which serves as a watchdog over insurance and utility rates and fight for the disabled and consumers entangled in the state's bureaucracy, will also be disbanded to save $600,000.

"The theme was that he was not increasing taxes," said Bill Dressel, executive director of the New Jersey State League of Municipalities. "If that's not translated into local taxes, that's applaudable."

The speech, given as New Jerseyans tried to thaw out from Wednesday's blizzard, got off to an awkward start. Democratic lawmakers introduced the governor minutes too early and had to extend their standing ovation until he arrived at the Assembly chamber.

"He must have gotten caught in a snowstorm," Democratic Assemblyman Lou Greenwald joked.

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